Chapter 6 - Depreciation Of Non-current Assets

Question 1

The estimate of the loss in value of a nin-current asset over its useful life is called ?

Answer 1

Depreciation

Question 2

What are the main factors that cause a non-current asset to depreciate ?

Answer 2

• Wear and tear
• Passage of time
• Depletion
• Ecenomic reasons

Question 3

What are the two most common methods of calculating depreciation ?

Answer 3

Straight-line method
Diminishing balance method

Question 4

Out of the Straight-line & Diminishing balance method, which one uses percentages and fractions ?

Answer 4

Straight-line method & Diminishing balance

Question 5

Out of the Straight-line & Diminishing balance method, which method reduces by the same amount each year ?

Answer 5

Straight-line

Question 6

Out of the Straight-line & Diminishing balance method, which method reduces different money amounts each year ?

Answer 6

Diminishing balance

Question 7

After depreciation charges have been calculated using either methods, they can be recorded in where ?

Answer 7

The Non-current asset register

Question 8

In relation to depreciation and non current assets

Which three accounts in the general ledger have connections to recording depreciation of non-current assets ?

Answer 8

1. Non-current asset cost account
2. Depreciation charges account
3. Accumulated depreciation account

Question 9

Where is the depreciation amount of the non-current assets listed in the statement of profit or loss ?

Answer 9

The expenses